Our thoughts & tips on small businesses, freelancers and sole traders

Starting a business can be a daunting task for a lot of people. Venturing out into the unknown can bring about anxiety and self doubt when diving in.

A lot is riding on having your business succeed. When you think about all that you will be investing into it – foregone time with friends and family, all the money, and the stress that is associated with it all.

I am not trying to scare you away from starting your own enterprise. The opportunity costs are great, but it feels good to be your own boss and bring something of use to the society.

There are a lot of things to consider before attempting to go out and start your own business.

Well I hope you have already come up with a business idea. If not, check out this guide, might give you some viable ideas that suit you.

Now let’s discuss the possible options available for you to gather the required finances to fund your start-up.

1. Crowd Funding Financing

This is a relatively straightforward method of acquiring money for your business. Essentially what this is, is reaching out to large amounts of people to help you acquire your financial goal to start a business.

Maybe 15 or 20 years ago, this would have been difficult to pull off. Not many people were as internet literate as they are today. Internet now is incredibly widespread, and the audience that can be targeted is enormous. Using the internet, you have virtually millions of potential investors that have a chance to help you out.

Now you may ask – what are some effective ways to reach out to the audience, that would help me fund my ideas?

Well there are websites created specifically to crowdfund you! Here are a few of them.

Kickstarter

This is a all-or-nothing funding approach. What that means is that if you don’t reach your goal, you don’t get anything that was funded.

For example, you set a goal of $10,000 you want to raise. In the end, people only were able to provide you with $8,200. Since you didn’t reach the goal of $10,000, you don’t get anything, and the people that funded you get their money returned.

People create different funding options to make funding them more appealing. Consider offering something beneficial to the people, reel in their curiosity with exclusive offers and rewards for providing you with the money.

Keep in mind to follow through with your idea if you reach the funding goal. Your don’t want your reputation soiled after acquiring the money but not going through with your promises.

Check out the FAQ of the ‘Kickstarter’ page to find out more information.

GoFundMe

This is another crowdfunding platform that you could use to gather capital. This site has a larger audience than the ‘Kickstarter’ I mentioned before.

This crowdfunding site doesn’t offer penalties for not reaching funding goals because there are no goals to reach. You get all the money you receive from people no matter the amount. Although the company does take 5% from each donation you receive.

If you are interested in this crowdfunding site, check out more information about them here.

CrowdCube

‘CrowdCube’ is a more unique approach to crowdfunding. The way you attract funds to your business is by offering a stake in your company.

Depending on the type of business you have or thinking of operating, this might be more up your alley. It is more appealing to investors when they have a chance of acquiring a portion of a company.

2. Relatives and Friends – Angel Investors

Friends and family can assist you.

This could be your first go to when looking for funds to start a business, aside from personal savings. Depending on your reliability, relatives and close friends would be more than happy to finance your dreams.

Now when asking for money from people you know and family, can be a scary thing. Money can ruin a lot of relationships if not used with caution.

When borrowing money from people you know, make sure you set clear timelines on when the money will be returned or offer a percentage of revenue you receive.

Don’t let poor financial decisions ruin the long lasting relationships you have developed over the years. Be honest about what and how you will be using the money you borrow.

3. Bank Loans and Lenders

A lot of people utilize this option in search for business funding. Bank loans are a relatively fast and easy solution to solve your money issue.

Keep in mind, acquiring a bank loan and the amount you receive strongly depends on your credit history and any outstanding debts. Banks will be more inclined to lend out money to individuals that have proven themselves as reliable.

A credit card is relatively easy to use and with the right precautions can be very useful and securing the required capital for your business expenses.

Again, exercise caution when using credit cards. With such power at your finger tips, it can be tempting to continue swiping it to cover all expenses. When they are paid off promptly, they carry an array of benefits, but misusing them can put you in a world of hurt.

Some credit card companies offer exclusive cards for small businesses. They offer a variety of bonuses when you use the card for business related expenses. Look into it, and see what suits you best.

5. Taking on Partners

Potential partners may bring something useful to the table.

Having partners along the journey of creating a business can always be great. They can offer a new perspective, share fresh ideas that can enhance your business. Also, lets not forget that they can also bring in the required funds to help develop your idea into reality.

Share the Same Vision

Sharing the same vision is crucial to your business success. You don’t want to take someone on that you will be not seeing eye to eye on the direction your business is heading.

Things can get a little hairy when both parties have invested considerable sums of money into the business but don’t agree on how to grow and develop it. It can turn into a nasty business custody battle when it’s time to part ways.

Variety of Capabilities

Look for a person or people that can bring something new to the table. Having multiple people be proficient in the same thing may be more of a hindrance than a benefit, at least in the beginning.

BONUS: Accessing 401k in the United States

401k Can be used, but with caution.

For those not aware, 401k is essentially an employer sponsored retirement account. It is one of the most popular retirement plans in the United States.

How it works, to put it simply, when you are employed, a portion of your income is taken and is stowed away into this account. Your employer has the ability to match the same percentage you put away too.

Depending on how long you had the 401k, there is a potentially large amount of money tucked away that could be used as start-up capital.